Judge lifts order halting Hastings buyout

Hastings Entertainment now is free to sell itself to a New Jersey licensing executive, a federal judge has said.

U.S. District Judge Mary Lou Robinson on Thursday lifted a temporary restraining order preventing Hastings and New Jersey executive Joel Weinshanker from closing a $21.4 million buyout deal.

Hastings announced its proposed sale, subject to shareholder approval, in March. Holders of two-thirds of the retailer’s 8.1 million shares of common stock must approve the deal, which would convert the retail chain into a private company and cash out stockholders at $3 per share.

A Weinshanker company, National Entertainment Collectibles Association, licenses movie, comic, video game and other branded content for a variety of products.

Shareholders Andreas Oberegger and David A. Capps sued Hastings and Weinshanker, alleging the share price was too low and that stockholders would be irreparably harmed if the transaction were completed before their claims were heard in court.

But on Thursday, Robinson denied Oberegger and Capps’ motion for expedited discovery of potential evidence in the civil lawsuit and a preliminary injunction to halt the sale in the meantime.

In her order, Robinson said Oberegger and Capps had not shown they had no other remedy available but the federal lawsuit to stop the sale.

Oberegger and Capps also did not show in their pleadings that the federal case had a “substantial likelihood of success” based on its merits or that other parties — other stockholders — wouldn’t suffer substantial harm if the sale is stopped until a trial on those merits could be held, the judge said.

In a separate order, Robinson gave the plaintiffs the right to amend to their claims under certain conditions.

Those conditions include proving the changes comply with federal law requiring plaintiffs to verify they were shareholders at the time they opposed the buyout and showing how they sought action from the company directors or, if not, why they did not make the effort.

Hastings has called a July 15 shareholder vote on the buyout in a special meeting set for 9 a.m. July 17 at the Hastings Store Support Center, 3601 Plains Blvd.

The company has asked shareholders to vote either in person during the meeting or by proxy statement by mail, telephone or over the Internet.

Hastings Chairman and CEO John Marmaduke and other Hastings insiders — directors and executive officers — control more than 35 percent of the company’s shares.

Those shares already are pledged to vote in favor of the buyout.

Weinshanker’s National Entertainment Collectibles Association owns more than 12 percent of Hastings stock and has pledged those shares in favor of the acquisition.

A forecasted future of continued losses prompted the Hastings board to seek a buyer for the company in 2012, according to its filings with the Securities and Exchange Commission.

The company’s workforce peaked at nearly 7,000 in 2004, according to a September Amarillo Globe-News analysis.

The retailer has since closed numerous stores and shed at least 2,000 positions, the analysis showed.

The company’s total revenues plunged from $548 million in 2005 to $436 million in 2013, as mail and Internet download delivery of movies and music eroded its profits.

Hastings faces a second civil class-action suit, filed May 9 in U.S. District Court by another shareholder.

The company has not yet answered those allegations but has pledged, in news releases, a “vigorous” defense to both lawsuits, which the company claims are without merit.